A monopolistically competitive industry is like a perfectly competitive industry in the sense that:
a. non-price competition is significant in both industries
b. there are no substantial barriers to entry in both cases.
c. economic profits in long run equilibrium are zero in both cases.
d. both (b) and (c) are true.
d
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Figure (a) represents the domestic demand and supply of televisions. Suppose free trade is allowed and the current world price of televisions is P1 as shown in Figure (b). As a result of free trade the domestically produced quantity would
a. fall to Q1.
b. rise to Q2.
c. fall to Q3.
d. rise to Q4.
On a graph, the area below a demand curve and above the price measures
a. producer surplus. b. consumer surplus. c. deadweight loss. d. willingness to pay.
If the MPC is 0.67, then the oversimplified multiplier is
A. 7.60. B. 6.70. C. 3.00. D. 33
Under both perfect competition and monopoly, a firm:
A. is a price taker. B. is a price maker. C. will shut down in the short-run if price falls short of average total cost. D. sets marginal cost equal to marginal revenue.